There is a need to develop human hepatocyte cell lines which retain both replicating capacity and highly differentiated functions to facilitate the development of an efficient bioartificial liver. The present study was undertaken to differentiate, using sodium butyrate, the actively replicating immortalized human liver cell line. The effects of butyrate on cell growth and cell cycle were analyzed, and the albumin synthesis, cytochrome P450 and ammonia-detoxifying activity of the butyrate-treated cells were measured. Butyrate treatment resulted in G2/M arrest of the cell cycle and polygonal changes in the cell morphology. Neither the control nor the butyrate-treated cells showed transformed characteristics. Butyrate treatment increased the amount of albumin secretion, cytochrome P450 activity, and the urea production rate of the cells. The present study provides non-transformed human hepatocytes, which can replicate unlimitedly and then restore differentiated hepatocyte-specific functions by butyrate, and therefore, have applications for the development of an efficient bioartificial liver.